Retailers Adjust Prices Due to COVID-19 Spread
It’s no secret that the spread of COVID-19 has changed the way retail works at a fundamental level. Gone are the days of a shopper walking into a store and browsing the shelves. Now, only essential brick-and-mortar retailers can remain open, while more consumers than ever before are doing their shopping online.
As a result, this has uprooted traditional supply and demand. To cope, retailers are finding any way possible to sell — and that includes pricing. Specifically, retailers are changing prices in ways that they wouldn't have before COVID-19.
Wiser Solutions reviewed thousands of SKUs across major retail categories to determine exactly where and how prices fluctuated in response to the spread of this virus.
Some Categories’ Prices Unaffected By COVID-19
First, not all categories showed a significant increase or decrease in pricing that could be attributed to COVID-19.
Two categories — books and health and beauty — had very small price fluctuations in the period prior to the spread of COVID-19 in the U.S. and the period after. Overall, the average price change between these two periods was just a 0.45 percent increase for health and beauty and a 1.51 percent increase for books.
Based on the data, it's unlikely these price changes are in response to COVID-19.
Other Categories Showed Clear COVID-19 Price Fluctuations
On the contrary, there were other categories that had price fluctuations that appeared to directly correlate to the spread of COVID-19 in the U.S. Two such categories were sports and outdoors and home improvement.
The sports and outdoors category had prices across more than 473,000 SKUs decrease by an average of 11.5 percent in the period after the spread of COVID-19 in the U.S. According to Wiser’s analysis of this data, this decrease is outside the predicted price change and is most likely in direct response to COVID-19.
Likewise, the home improvement category had a similar virus-related price change. However, the prices in this case increased. After COVID-19 spread across the U.S., more than 200,000 SKUs in the home improvement category showed an average increase in price by 34.4 percent compared to the period immediately before COVID-19.
The home improvement category had the greatest price change due to COVID-19 of all the categories analyzed by Wiser Solutions.
What This Means for Retailers
In summary, Wiser Solutions’ data on price fluctuations across retail categories pre- and post-COVID-19 indicates that retailers are acting outside their normal behavior with regard to price.
They're more likely to either drop or increase prices, likely in response to changes in consumer behavior and demand. Given that the price increases happened in categories that would appear to be more in demand post-COVID-19, such as home improvement, it's possible that retailers in this space are looking to capitalize on that demand. Vice versa, decreased demand in categories like sports and outdoors has retailers dropping prices to address the lack of motivated buyers.
In total, retailers today will have to be extra vigilant about their competitors’ prices and ready to reprice their SKUs quickly to remain competitive. COVID-19 has changed consumer behavior in ways not easily predicted just a few months ago, and it’s a safe bet that the changes aren't over yet.
Wiser will release a more in-depth analysis of this data on its website. Check back for more updates.
Chris Angell is vice president of marketing and Amy Yu is a data analyst at Wiser Solutions, Inc, the leading provider of actionable data for better decisions.